National Mortgage Index February 2018

Market ‘ticks over nicely’ in January

January saw a slow but steady start to 2018, which was both in line with normal seasonal expectations, but also many industry predictions in terms of how the UK property market will perform this year.

Looking back over previous years, January generally lags slightly due to the ‘Christmas Hangover’ and this year was no exception, with many advisers reporting that it took a couple of weeks for the market to find its feet again after the New Year.

That said, once market momentum had returned, we saw a solid month overall with annual house price growth still evident, albeit at a modest level, which correlates with reports from other indices, such as Halifax and Rightmove, also pointing to subdued but discernible annual increase in house prices. Transaction volumes were also encouraging, with HMRC reporting that the level of properties sold in January 2018 was broadly similar to those in January 2017, underscoring again that it was very much ‘business as usual’.

First Time Buyer activity across the board did appear to be more evident in January, continuing the trend observed in 2017 and reported by UK Finance, pointing to 2017 being the busiest year for First Time Buyers in over a decade. It’s highly likely that the change in SDLT in November last year has stimulated those who were considering getting on the ladder over the next year to perhaps start their search in earnest, and of course as part of that process to start applying for a mortgage in order to ascertain how much they are able to borrow.

Key market indicators in January include:

• The average purchase price dropped by 1.12% last month to £245,742 from £248,637 in December 2017, but saw year on year growth of 0.8% against the average purchase price of £243,816 in January 2017.
• The average First Time Buyer mortgage increased in January by 2.3% on the previous month, up from £126,826 in December 2017 to £129,917 in January 2018.
• The UK average remortgage loan dropped slightly last month, from £172,795 in December 2017 to £170,102 in January 2018.

A slight month on month decrease in purchase price between December and January is absolutely within seasonal expectations, and reflects the fact that those who are actively buying and selling at the beginning of the year are likely to be in ‘negotiation mode’ to get the deal done. Usually, those moving home in January are doing so due to lifestyle factors, rather than as discretionary movers, so there is normally a significant reason why those selling are incentivised to perhaps take a slight reduction in their asking price in order to secure a quick sale.

Overall then, the data would point towards a healthy start to 2018, with the market appearing to tick over nicely and maintaining the same steady momentum as 2017.

To read more about this month's National Mortgage Index, click here